Social innovation, how companies can make a positive impact on societyMore and more organizations are betting on solutions that, in addition to bringing economic benefits, help to improve today's society. In this way, social innovation is positioned as a tool that contributes to both business performance and the quality of life of citizens.
Photo: Innovation and social entrepreneurship are effective tools for contributing to the success of SDGs. Credit: Pexels/Snapwire.
Did you know that the poorest half of the world's population owns just 2% of total wealth, while the richest 10% of the global population accounts for 76%? These figures from the Word Inequality Lab's Global Inequality Report 2022 are coupled with other data published by the United Nations Development Programme (UNDP), which states that climate change will result in increased mortality in three out of four developing countries. In G20 countries, which are the biggest polluters, this phenomenon will be seen in one in every three countries.
Climate policies, such as carbon taxes, risk impacting low- and middle-income groups, without changing the consumption habits of wealthier groups. Inequality exists and organizations can play a key role in addressing it.
As a result, more and more companies are seeing social innovation as an opportunity not only to improve their business, but also to generate a positive impact and be part of the solution to these problems.
But what exactly is social innovation and what makes it so relevant to organizations?
A new way of thinking
In the words of the World Economic Forum, social innovation is "the application of innovative, practical, sustainable and market-based approaches that benefit society in general, in particular low-income and underserved populations. Social innovation means going further. It is more strategic, more ambitious and collaborative thinking to provide access and opportunity to millions of people.
For Cristina Moreno, Innovation Network Expert at Opinno Mexico, social innovation is "a set of methodologies and tools which help address the world's most urgent social, economic and environmental problems, without neglecting corporate governance and economic benefits for organizations".
Organizational involvement in social issues is not new. Companies have long been deploying a number of tools to generate an impact on society, such as Corporate Governance and Corporate Social Responsibility (CSR). However, companies still have work to do: "Although the word sustainability has begun to take hold in corporate strategies, the vast majority are not aware of social innovation's potential," says Moreno.
According to a report on the results of a corporate sustainability assessment, almost half of Spanish companies are implementing some type of innovation with a sustainability focus and following Sustainable Development Goals (SDGs), but only 16% say that all of their innovations are oriented in this direction. The same report highlights that there are still many companies that are not yet implementing this type of innovation (51% of the total) and that these are mainly companies which lack in-depth knowledge of the United Nations 2030 Agenda.
The numbers speak for themselves: many organizations neglect to value their contribution to sustainable development and to leverage their efforts. Therefore, keeping the 2030 Agenda in mind is essential to align organizations' objectives with anticipated global trends and opportunities for the years ahead. Innovation and social entrepreneurship are effective tools for contributing to the success of SDGs. In this regard, an increasing number of companies are becoming aware that they must not only change the way they produce, but they must also go further to make the current economic model a more efficient and purposeful one.
To this end, business strategies must undergo a transformation. A genuine disruptive change is needed in order to carry out more ambitious actions such as, for example, incorporating a contribution to the 2030 Agenda and compliance with the Ten Principles of the Global Compact into corporate strategy; establishing public and quantifiable objectives based on the SDGs; integrating a culture of sustainability into all organizational areas through training and awareness-raising; or carrying out responsible supply chain management, thereby minimizing social and environmental impacts. In this way, organizations will be able to develop a genuine business model transformation and have a positive impact on society.
"Social innovation allows us to put into action and realize all these efforts to close the gap between where we are and where we want to be. Defining an organization's purpose, designing and launching new business models, applying open innovation with sustainable objectives and influencing culture and leadership are among the means and tools that social innovation provides to companies," concludes Moreno.
A culture of impact
For organizations to be more competitive, they need to think in terms of social impact and sustainability. Therefore, it is also crucial to foster an organizational culture in which teams are willing to take risks, develop collaborative practices and foster a mindset and way of working that is open to new products and services.
In this regard, one of the benefits of making social innovation an integral part of organizations is the attraction and retention of talent and employees. "Companies that develop social innovation work with a purpose, which motivates employees and involves them in the business culture," said Moreno.
In addition, according to a Deloitte report, the vast majority of Generation Z and millennials (90%) strive to reduce their personal impact on the environment. As such, many are pushing the organizations they work for to act. Tomorrow's workforce views business success differently than their parents' generation and prioritizes long-term sustainability over short-term profit maximization.
Having a team that is aware of the impact of its activity and supports social innovation also enables companies to rethink their business models, moving beyond the generation of profits, to seek new solutions and to collaborate with people in terms of their impact on the population. For Moreno, this increases competitiveness and allows new models to be explored that have a positive impact on the organization's results.
The advantages for companies include both financial returns and improvements in long-term competitiveness, access to new markets or consumers, strengthening supply chains and, as mentioned above, attracting and retaining talent.
In short, companies have an opportunity to join the social and environmental cause as a fundamental way of differentiating themselves from the competition and to be among those players moving towards achieving SDGs.